ICD-10 Transition: Smooth Sailing So Far, But Miles to Go

November 05, 2015

The new ICD-10 diagnostic codes that took effect on October 1 aroused the kind of fears one might feel reading the Book of Revelation. A seven-headed beast of a code set was going to wreak havoc on physician practices, and their cash flow in particular.

Five weeks into the ICD-10 era, the sun hasn't darkened, and Armageddon doesn't appear to be around the corner. The word from all quarters of the healthcare industry is that other than for some hiccups, wrinkles, and annoyances, physician practices are successfully submitting claims with the new codes and getting reimbursed by third-party payers — so far.

"It's gone about as well as we could have hoped," said Leslie Narramore, director of reimbursement at the American Gastroenterological Association (AGA), in an interview with Medscape Medical News. "It's more than a yawn, but nobody would say the issues are catastrophic."

Robert Tennant, director of health information technology policy at the Medical Group Management Association (MGMA), also reports that the debut of ICD-10 has largely resembled the turn-of-the-century Y2K fright that fizzled. "It's a little early to do an end-zone dance, however," Tennant said. "Give it a few more months, and we'll see more of the impact."

The Centers for Medicare and Medicaid Services (CMS) declared some preliminary good tidings about ICD-10 last week. From October 1 through October 27, the percentage of Medicare claims summarily rejected because of incomplete or invalid information, like a bad code, was unchanged from the historical baseline of 2%. During that time, the agency's Medicare administrative contractors (MACs) were processing claims for services rendered before October 1 and bearing the old ICD-9 codes, and for services rendered after the ICD-10 go-live date. Claims rejected because of invalid ICD-10 codes accounted for only 0.09% of all claims submitted.

In addition, the percentage of processed claims denied for payment during that period — 10.1% — was just a tick above the historical baseline of 10%, according to CMS.

Emdeon, a company that funnels physician claims to public and private payers in a clearinghouse role, also reports numbers that belie an ICD-10 crisis. The rate of Emdeon-routed claims rejected by all payers in October matched or slightly undercut the historical baseline, said Mike Denison, the company's senior director and ICD-10 program manager, in an interview with Medscape Medical News. "We've seen the majority of the industry transition successfully to ICD-10, both providers and payers."

MGMA's Tennant and others attribute these calming trends in part to Medicare's decision this summer to give physicians credit for less-than-perfect ICD-10 coding at the outset. The agency announced that for the first 12 months of the rollout, it would not deny claims based solely on code specificity as long as the physician chose a valid code from the right category or family for the condition. A number of private health insurers have followed Medicare's lead on coding flexibility.

Another factor contributing to the good start — mentioned by nearly everyone interviewed — has been the willingness of payers, clearinghouses, software vendors, and other parties to quickly fix ICD-10 problems as they arise.

"We have that on the plus side," said Deborah Grider, a practice management consultant with KarenZupko and Associates (KZA). Grider, too, characterizes the ICD-10 rollout as better than expected. "It's gone fairly smoothly, with a few glitches and claims denials here and there."

Medicare Snafus

At this point, Medicare accounts for most physician complaints about ICD-10 implementation, as relatively few as they may be. They involve claims processing governed by two sets of special Medicare rules.

One set of rules, called "local coverage determinations" (LCDs), are adopted by individual MACs. They spell out under what circumstances a MAC will pay for a particular service. To establish all-important medical necessity, a claim must include one of the diagnostic codes specified by an LCD.

Before October 1, the diagnostic codes used in LCDs came from the ICD-9 set. Afterward, they were supposed to be ICD-10 equivalents. However, there are roughly five times as many diagnostic codes in ICD-10 as in ICD-9 on account of their greater specificity about the location of conditions and injuries, their laterality, clinical manifestations, the source of injuries, and other criteria. "The number of wound care codes went from around 20 to 125," said coding consultant Betsy Nicoletti in Northhampton, Massachusetts. There could be five ICD-10 permutations of a single ICD-9 code listed in an LCD.

By all accounts, some MACs left out some ICD-10 equivalents to ICD-9 codes when they rewrote their software "edits" for LCDs. As a result, when physicians submit an omitted, but correct code, the MAC rejects the claim. The practice then has to appeal the decision, and the MAC has to plug the missing ICD-10 code into its LCD. MGMA's Robert Tennant said MACs are fixing such problems promptly, by and large, but requiring practices to resubmit the rejected claims, which delays payment.

Pennsylvania physicians have encountered LCD snafus involving hearing tests and ophthalmic diagnostic imaging, according to Mary Ellen Corum, director of practice support at the Pennsylvania Medical Society. The MAC in question, however, is working hard to get up to ICD-10 speed, Corum told Medscape Medical News.

There's a similar story playing out with the other set of special claims-processing rules called National Coverage Determinations (NCDs). CMS recently informed medical practices that 26 NCDs covering services ranging from colorectal cancer screening tests to adult liver transplantation won't transition from ICD-9 to ICD-10 until January 4. In the meantime, Medicare will reject claims for these services bearing the correct ICD-10 codes, forcing physicians to resubmit them in 2016.

This cash flow crimp at year's end will complicate financial decisions that physicians typically make now about bonuses, staff raises, and budgeting in general, Corum told Medscape Medical News. "It's a tough time not to know where you stand." Aside from this hassle, Corum said she remains "cautiously optimistic" about the overall shift to the new diagnostic codes.

AGA's Leslie Narramore said her medical society worked with CMS to speed up a coding correction for one procedure covered by an NCD — colonoscopy cancer screening. One of the many reasons Medicare will pay for such a colonoscopy is if the patient has a personal history of polyps. The ICD-9 code for this diagnosis in the NCD was V12.72; the ICD-10 equivalent is Z86.010. But somehow, Medicare was denying claims for colonoscopies with the replacement ICD-10 code, saying it was a noncovered diagnosis.

Narramore said she brought the issue to the attention of CMS officials, including ICD-10 ombudsman William Rogers, MD. The result? MACs will begin accepting the Z86.010 code for screening colonoscopies for patients with a personal history of polyps sometime later this month. In addition, rejected claims with the new code will be reprocessed automatically. "That's pretty quick for CMS," said Narramore.

Interrupted cash flow for gastroenterologists won't break their bank, she said, but the Z86.010 episode nevertheless took its toll. Office staff spent hours on the phone with local MACs trying to figure out why the claims were denied. They also had to field phone calls from anxious patients who had been notified that Medicare would not pay for their colonoscopy, leaving them on the financial hook.

"It was nothing to sneeze at," said Narramore.

One Year to Master Code Specificity

Healthcare industry figures interviewed by Medscape Medical News said they have heard of few if any problems with state Medicaid programs processing claims bearing the new codes. Then again, they note that the jury is still out because state Medicaid programs adjudicate claims more slowly than Medicare, which typically pays electronic claims in 2 to 4 weeks (but no sooner than 14 days after receipt). A ton of Medicaid claims for services rendered in October, therefore, are still in the pipeline.

"We haven't had a rash of complaints, but it's too early to tell," said Gene Ransom, chief executive officer of the Maryland State Medical Society, also known as MedChi.

If ICD-10 problems are going to crop up for Medicaid claims, they're most likely in Ransom's state along with California, Louisiana, and Montana. The Medicaid programs there have not yet updated their claims-processing software with the new codes. CMS is allowing them to accept claims with ICD-10 codes and then "map" them to ICD-9 equivalents. Like others, MGMA's Robert Tennant warns that this conversion process invites all kinds of errors that could cause correctly coded claims to go unpaid.

Then there are commercial health insurers. Contrary to what physicians feared before October 1, relatively few red flags have surfaced so far about how these companies are handling ICD-10 codes. MedChi's Gene Ransom credits this to private insurers by and large voluntarily adopting Medicare's policy of initially not demanding precise specificity beyond the correct code category.

"That explains why we're not having a lot of problems," he said. Medicare's decision on coding flexibility "has paid dividends."

Ransom and others told Medscape Medical News, however, that it will take several more weeks or months to spot any emerging ICD-10 problems with commercial insurers. Accordingly, physicians and their billing staffs need to closely monitor the number and causes of denied claims going forward. Commercial insurers, after all, aren't obliged to overlook specificity mistakes on matters like location and laterality as Medicare is doing.

And insurers now granting forgiveness have promised to get stricter at some point in the future, said Tennant. "Will it be two months, or six months? Will they give us advance notice, or will it be out of the blue?" All the more reason, then, to study those denials.

Better yet, physicians should use the current grace period to master the specificity of the new diagnostic codes, and the more detailed chart documentation that comes with it, said KZA's Deborah Grider. Grider told Medscape Medical News that the flexibility temporarily granted by Medicare and private payers tempts physicians to be lax about ICD-10 accuracy.

"I've heard them say, 'I've got another year, so I won't worry about it,' " she said, noting that their attitude is understandable. "Physicians have so many things on their plate, like [electronic health record] meaningful use. They think this is the least important thing they have to do."

However, the financial livelihood of their practice depends on correct diagnostic coding, according to Grider.

"Even though they're paid based on a procedure code, the diagnostic code supports the medical necessity for the procedure," Grider said. "After 12 months, all bets are off, and if physicians aren't coding with specificity, there will be repercussions."


Emdeon operated under the name WebMD Corporation until August 2005. At that time, the company was spun off and changed its name to Emdeon to avoid confusion with its then subsidiary, WebMD, which is the parent company of Medscape.


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